I have previously shared my views on business opportunities fueled by innovators that entrepreneurs transform into new ventures, particularly those in emerging world regions (e.g. Latin America, my favorite). Today, I address three cornerstones that combined enable significant wealth creation opportunities as we look into the next decade(s): exponential growth, the democratization process that technology fuels, and the 9 billion population bubble that the world will experience before 2050.

Living in Exponential Times

The term “exponential” is often used, but rarely understood. Most of us can intuitively understand linear growth. Similarly, we can grasp technology, process, or even demographic growth that improves or grows on a fixed percentage basis within a given time period[1] (e.g., 1 or 2% per year).

We have more trouble grasping exponential growth. Moore’s Law, Intel co-Founder Gordon Moore’s observation that computer power doubles about every 18 months at the same cost, helped to popularize the notion of exponential growth here in the SF Bay Area.[2]

Evolution in a logarithmic plot of the number of transistors integrated in a single microcomputer chip. The reader may recognize some common microcomputers used in desktops, laptops, and servers.

During the 1950s and 60s, computers remained the privilege of “feudal lords” (a.k.a. Computer Center Directors) while the “rest of us” watched from the “other side of the glass house.” The 1970s brought the first minicomputers into the office space and with it the empowerment of departments (starting with engineering and R&D) but soon propagating across other corporate departments. The PC arrived in the 1980s, eventually populating individual desks and empowering individual users. In the 1990s, affordable computers entered households en masse, we networked everything together, and by the late 1990s desktops became laptops. The 2000s ushered in a remarkable era of affordable mobility, which brings us to today’s myriad of smartphones and tablets as the new “must-have” consumer devices. Among these, the smartphones are arguably the fastest technology adopted by humans in the history of the world, with over 4 billion in use today.

Computer power has left the traditional fields of computing and communication and is now embedded in all areas of human activity, including[3]:

Moore’s Law hasn’t just helped us to understand exponential growth. It also challenges us to understand the impact of this growth. While the speed of technological transformation is unprecedented, its impact has profoundly impacted almost every aspect of our modern lives. Back in the 1970s, neither I nor my colleagues at Carnegie Mellon’s Electrical & Computer Engineering Department could foresee the modern computer’s utility across all areas of human behavior, extending even to non-traditionally technical fields like fashion and animation.

This dramatic extension of utility enables us to tackle more complex problems and visualize more complex solutions. As the benefits of Moore’s Law have grown exponentially, we have entered a new era of humanity where most (if not all) areas of human knowledge and behavior will benefit at an accelerated pace doubling its price-performance every 12 to 24 months!

Democratization of Access to Information and Knowledge

Moore’s Law enabled the development of computing and communication platforms that are cheaper, smaller, consume less energy, and are incredibly powerful. More people than ever before can afford to carry such devices in their pockets, purses, and backpacks.

As with Moore’s Law, this democratization process is not linear due to the network effect, giving way to a new “Law” called Metcalfe’s Law. In short, the Law states that the value of a communications network (e.g., a web community like Facebook or LinkedIn) is the square of the number of members of that network.[4] Current projections are that the approximately 1.5 billion people online today will grow to about 5 billion by 2020, adding over 3 billion participants to the conversation, providing them with a global audience, and enabling them to contribute enormous new value to society.

This democratization process has enabled billions of participate in the knowledge society making it distinctly global, egalitarian, and meritocratic. The challenges being addressed today are not just those in traditional power centers (e.g., New York, London, and Hong Kong), but anywhere that local challenges can be addressed with creative, knowledge-driven solutions.

The 9 Billion Population Bubble

The planet is set to add about 2 billion people to today’s population of 7 billion well before mid-century, and over 80% of this growth will take place in emerging countries. This dramatic growth will bring unprecedented new challenges and exacerbate existing ones across all aspects of human life: water, food, energy, health, education, poverty reduction, environment, security, etc. I do not buy the Malthusian[5] notion that these challenges are insurmountable. Instead, I’m a firm believer that technology’s exponential growth and the democratization it brings will lead to unprecedented solutions to address new challenges as they emerge.

My hope is that Latin America will seize the opportunity for the benefit of its citizens and the rest of the world!

Until my next posting – Carlos B.

[1] Although compound growth it is exponential, the point here is small lineal annual increases are easier to grasp.[2] Readers may remember the story of the rich King who asked how the Inventor of the game of chess would like be rewarded. The Inventor told the King that he would like just one grain of wheat on the first square of the chess board, double that number of grains of wheat on the second square, and so on: double the number of grains of wheat on each of the next 62 squares on the chess board. The King, thinking that this was a modest request, ordered his servants to bring the wheat. He was befuddled when he learned that he didn’t have enough wheat to pay the Inventor, since the number of grains of wheat on the chess board amounted to 264 grains of wheat.[3] Peter Diamandis TED talk “Abundance is our Future.” February 2012. Available at http://www.ted.com/talks/peter_diamandis_abundance_is_our_future.html.[4] Actually this value is extreme. A more accurate description of the value is between n2 and n x log(n).[5]http://en.wikipedia.org/wiki/Malthusian

3 Responses to Capturing Unprecedented Opportunities in Exponential Times

Hi Professor. It was great to read one of your articles. I even enjoyed reading the notes! I’ve never before heard the story of exponential rice payment. That story alone combines both the starvation element of Malthusian’s notion and food abundance as a result of Moore’s Law/exponential trickery! I hope all is well.

Excellent analysis Carlos. The concept of “exponential times” is mind-boggling. To illustrate the concern I would like to share a recent speech of the President of Uruguay. It is in Spanish but with subtitles in various languages including English http://www.youtube.com/watch?v=zsOGZKRVqHQ